The fall of cryptocurrencies accelerates: Iran and oil spike market volatility

The cryptocurrency decline that began over the weekend deepened on Monday after traditional markets reopened. Bitcoin fell back to $67,260, reflecting a 1.22% drop in the last 24 hours, while Ether decreased by 0.44% and Solana suffered a more severe decline of 1.73%. The initial Sunday plunge around $68,000 quickly vanished as investors started to assess the implications of the US-Iran conflict on global markets.

Why is Bitcoin losing momentum? Geopolitical tensions drag down risk assets

Bitcoin’s retreat and the broader crypto market’s decline are not happening in a vacuum. Brent crude oil prices surged up to 13% at market open on Monday, finally stabilizing around $77.50 with a 6.4% increase, the largest since Russia’s invasion of Ukraine in 2022. The Strait of Hormuz, through which about a fifth of the world’s oil passes, is effectively closed, amplifying supply risks.

This energy turbulence has cascading effects. Asian stocks fell 1.4%, while Wall Street futures declined 0.7%. Gold, considered a safe-haven asset, rose to $5,350 per ounce. The cryptocurrency market, classified as a high-risk, high-reward asset, acts like a sensitive thermometer to geopolitical pressures: when global risk increases, money flows into safe assets.

Beyond the numbers: how energy inflation reshapes markets

The real issue for risk assets like cryptocurrencies lies in the inflation expectations driven by expensive oil. Higher energy prices delay the Federal Reserve’s rate cut schedule, tightening liquidity conditions that support market prices.

Solana experienced the sharpest decline, losing 1.73% in 24 hours and 1.31% over the week. Ether remained relatively resilient at $1,970, while XRP stabilized at $1.36. The outlook would reflect more lasting damage if tensions are not resolved soon.

Is there a lower limit? Experts debate the risk of further correction in cryptocurrencies

Not everyone sees a catastrophic crash ahead. Jeff Mei, COO of BTSE, argues that downside risk could be limited because Iran has been isolated from global financial markets for years. “The world has already disengaged from Iranian oil, and increased supply from OPEC and the US should be enough to stabilize prices,” he says.

However, this assessment depends on two crucial variables: whether the Strait of Hormuz reopens and how long it takes for US objectives to be achieved. Monday’s reports were contradictory — The Wall Street Journal mentioned renewed momentum for nuclear negotiations, while Iran’s national security chief dismissed any dialogue — leaving the crypto market operating as a risk asset in a significantly more uncertain world.

Until both questions receive clear answers, continued volatility and sensitivity of cryptocurrency declines to each geopolitical news remain the most realistic outlook.